CURRENCIES: Euro Slumps As French-election Fueled Bounce Fades

The euro pulled back on Monday, after a brief relief rally over centrist reformer Emmanuel Macron's victory in Sunday's French presidential election.

The shared currency traded at $1.0931, down 0.6% from $1.0999 late Friday in New York. Earlier in the trading session, the euro had jumped above $1.10 to a six-month high (http://www.marketwatch.com/story/investors-are-breathing-a-sigh-of-relief-over-france-for-now-2017-05-07) as it became clear Macron won almost two-thirds of the votes in the race for France's presidency, compared with about a third of the vote for euroskeptic candidate Marine Le Pen.

Le Pen had promised to lead France out of the eurozone, which was viewed by market participants as a threat to the European Union status quo, with a potential to roil stocks, bonds and currency markets globally.

Immediately after early estimates of the vote pointed to a Macron victory, adding to gains for the shared currency leading up to the vote. Monday's retreat was being viewed as investors reassessing reasons to continue to own the euro, on the heels of its healthy pre-election gains.

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The euro "pulled away in a classic 'buy the rumor, sell the fact' style given that traders were already positioned for a Macron win," said Hussein Sayed, chief market strategist at FXTM, in a note Monday morning.

Sayed said there are still challenges for Macron ahead of parliamentary elections in June that will help to determine the scope of his political authority.

"The next challenge for Macron is going to be the parliamentary elections in June, and given that there's a lack of significant support, it remains highly uncertain whether the President can build a parliamentary majority. However, I don't think this is going to be a major concern to the euro," he added.

See:Investors are breathing a sigh of relief over France, for now (http://www.marketwatch.com/story/investors-are-breathing-a-sigh-of-relief-over-france-for-now-2017-05-07)

In other currency trade on Monday, the ICE Dollar index rose 0.4% to 99.077, with the greenback rising against all other major currencies.

The dollar strengthened against the Japanese yen, , buying Yen113.02, up from Yen112.72 late Friday in New York.

In the U.K., the pound moved lower, trading at $1.2944, down from $1,2986.

Emerging-market currencies also weakened sharply against the dollar on Monday. Mexico's peso fell 0.9%, with the dollar buying 19.16 peso. The Turkish lira fell 1.1% against the dollar, trading at 3.5828 late Monday in New York.

Meanwhile, the South African rand was among the weakest performers on Monday, falling 1.4% against the dollar to 13.6044.